Sign In

Coaltrans China - Cleaner coal vs. Natural gas

Driven by the pressure to curb carbon footprint, increased use of clean energy and renewables are the keynote messages in the recent environmental policies. However, is it economically viable? Market participants at the 12th Coaltrans China Conference looked at the issue from a different perspective.

Driven by the pressure to curb carbon footprint, increased use of clean energy and renewables are the keynote messages in the recent environmental policies. However, is it economically viable? Market participants at the 12th Coaltrans China Conference looked at the issue from a different perspective.

Technically, gas-fired generation is not a materially better solution to Chinas air quality problem, said Mike Thomas, Partner of Lantau Group and a speaker at the Conference held in Shanghai.

However, natural gas is considered to be one of the cleaner sources of energy and a potential replacement of coal for power generation. Gong Qingchao, Executive Director of China Coal Group said that the country is making efforts to increase natural gas supply and trying to introduce power transmission to replace coal transmission.

Chinas natural gas consumption is growing steadily. In 2013, natural gas power generation has replaced nuclear energy to become the No.4 energy supply, said Gong, who spoke in the morning session.

The recent policy trend seems to run counter to the economic analysis by Mike Thomas who found that the cost of switching from coal to natural gas is exceptionally high and more advanced coal-fired efficiency could also achieve the same low level of emission as natural gas.

Chinas gas-based generation on-grid prices are very low compared to those of the US or Europe. Since many gas-fired plants rely on the financial subsidies from local governments, the recent increase of on-grid prices does not give sufficient incentives for grid operators to dispatch more gas-fired generation.

Even though natural gas exceeded nuclear energy in terms of energy supply, at the growth rate of 4.7% from 2012,its proportion in the countrys total power generation in 2013 is only 2.1%, according to Gongs figure.

The amount of natural gas needed by the power sector to achieve a 10% generation share is almost as much as what China currently uses, said Thomas, It creates a huge pressure on the already stressed gas supply sector.

Chinas gas consumption in 2013 is 15 billion cubic feet/day, which is very close to the amount that will be produced in 2020, at 16 billion cubic feet/day as currently estimated.

As domestic production lags behind the demand, Chinas imported gas grows rapidly. However, imported piped gas and LNG are much more expensive. Additionally, the development of gas infrastructure requires a large amount of investment. By 2012, China has 45,000km of gas network, in contrast with the 360,000 km inter-state pipeline length in the US.

Chinas coal use is preferable to natural gas even at extraordinary carbon prices, said Thomas, who pointed out that in Asia, the cost of gas emission per tonne of CO2 is US$72 more than the newly produced coal, whereas the price gap is US$20 in Europe, and in the US, newly produced gas is US$33 lower than the newly produced coal.

Thomas found that coal-fired generation with technologically advanced emission control systems can play a significant role in improving Chinas air quality. Coal use in Chinas power sector is amongst the cleanest emitting in the world, he added.

According to his statistics, Chinas boiler efficiency roadmap currently has the most cost-effective CO2 reduction strategy. If a 300MW unit is replaced by advanced USCs (Ultra Sonic Cleaning), 72 million fewer tonnes of 5,500 kcal/kg coal would be used for each 1,000 TWh generated. With the latest AQCS (Air Quality Control System), emissions per MWh would approach the level of a gas-fired CCGT (Combined Cycle Gas Turbine). For example, dust removal efficiency rates, ie.Electrostatic Precipitators(ESP), BH(Baghouse) and ESP+BH,are at 99.84% for 4 ESP, 99.968% for 5 ESP and 99.99% for 6 ESP.

The other low cost strategy to reduce emissions involves shifting non-power sector coal use to the power sector. For example, the smoke and dust emission of a power plant boiler is below 1kg per tonne of coal burnt, comparing to the 3.5kg from a small scale boiler.

In September 2013, the State Council has issued Air Pollution Prevention Action Plan after heavy fog and sand storm frequently hit the country's major cities such as Beijing and Tianjin. The plan requires that by 2017, coal-fired boilers of smaller than 10 steam ton/hr will be phased out in urban areas and construction of new boilers of smaller than 20 steam ton/hr will not be permitted.

It also requires the share of coal in the total energy consumption to drop below 65% by 2017, and BTH, Yangtze River Delta, Pearl River Delta regions to have negative growth of coal consumption.

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenters opinions and affiliations available at the time of the presentation.